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What the Heck is Going on with Healthcare?

Healthcare. We are all pretty sick of only hearing about tweets, Russia and healthcare reform in the news. What is the deal with the reform and in what ways can it impact us? If the current repeal and replace efforts fail, what are the alternatives? What exactly is the single payer system? Universal healthcare? Medicaid for all? Is there a difference between all these terms? Let’s take a deep dive into this and figure it out together..

A Very Brief Overview of the Five Types of Health Care

Here is a brief description of the five different types of health care around the world by Mother Jones

Socialist: The government owns the hospitals and directly employs the doctors. The UK uses this type of healthcare. The US Veteran Affairs healthcare works on this model.

Single-payer: Doctors and hospitals are mostly private entities, but are paid exclusively by the government. Canada is single-payer and Medicaid and traditional Medicare are single-payer in the United States.

Multi-payer: Same as single-payer, but doctors and hospitals are paid by multiple sources: the government, regulated sickness funds, regulated insurers, etc. There’s a continuum in multi-payer systems, from those that are almost single payer (France) to those where other payers play larger roles (Germany, the Netherlands, etc.). Multi-payer is the most common type of universal health care it offers a little more flexibility in coverage than the single-payer system. Medicare Advantage is basically multi-payer in the US.

Subsidized private: People are required to be covered by private insurance, but the government provides subsidies to make coverage affordable. Switzerland uses this system. This is the Obamacare model.

Private: This is used only in the United States. Employer health care in America is essentially entirely private. Government is involved indirectly via the tax code allowing employees to receive health coverage free of taxes.

Single Payer or “Medicare for All”

Single payer health care is a type of national health insurance where the financing of the insurance is from a single public agency but the delivery of care is largely provided by private entities. Single payer would cover all American citizens for all medically necessary services: doctor visits, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs. Sound familiar? It’s because it is what Medicare is! We already have this system in place for our seniors.

The single payer system also combats some of the biggest issues with the Affordable Care Act – like mandatory participation. The point of mandatory participation is to take away the ability for citizens to jump in and out of the health care pools, only buying insurance when they need it, aka ‘gaming the system’. If insurance companies are only getting paid for insurance from people who need it, they would incur way too many expenses and go out of business quickly. Single-payer also helps combat the pre-existing conditions battle because insurance is given to everyone, without prejudice.

Another issue many Americans face is not having an affordable option for health insurance, especially if they are self-employed. The “working middle class” are people who make too much money to qualify for Medicaid or coverage subsidies provided by the Affordable Care Act — making coverage very expensive.

How a Single-Payer System Would Save Money

The United States is the only developed nation or advanced industrialized democracy in the world that does not provide its residents with guaranteed access to basic health care. Single payer systems are based on need, not on ability to pay. Having a single payer system also takes the burden and confusion off of employers to pay for insurance and make coverage decisions. According to Gerald Friedman, Ph.D., an economics professor at the University of Massachusetts at Amherst, single-payer health care would reduce costs by 24%, saving $829 billion in the first year by cutting administrative waste and allowing negotiation of prescription drugs. It would also create savings for 95% of our population with only the top 5% paying slightly more.

According to the Organization for Economic Co-operation & Development, the total cost of providing coverage under the single-payer system is lower than the total cost of our current private system in the US. A single-payer system would lead to immense cost savings in many different areas. First, because administrative costs would be consolidated, they would go down substantially (by about 83%) compared to current costs. Second, there is no reason to waste money on advertising against the competition, so 100% of those costs are saved. Third, and one of the most important, is a single-payer system enables government entities to better negotiate down our obscenely high prices for visits, procedures, and medicine. Finally, a single-payer system saves companies 100% of the money they spend processing information for the insurance industry and identifying and negotiating insurance plans.

What about Universal Health Care?

Universal Health Care is a term that comes up frequently when discussing health care. It does not refer to a specific system, like single-payer, but instead to the results of the system you choose. According to the World Heath Organization, universal health care (coverage) is when all people and communities can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship. The idea of universal heath care came from the WHO constitution of 1948 declaring health a fundamental human right. This type of coverage aims to give affordable, quality care equally to all people who need health services. Some countries with universal coverage are: Austria, Croatia, Czech Republic, France, Germany, Greece, Iceland, Ireland, Italy, the Netherlands, Norway, Portugal, Romania, Russia, Serbia, Spain, Sweden, Switzerland, Ukraine, and the United Kingdom. The United States cannot currently claim to have Universal Health Care, and neither of the systems proposed by the House or Senate this year would achieve that goal either.

Single Payer: The Bills

There have been many different single payer bills proposed across different states over the last few years, few have experienced any success. Here is a map of all of the bills in the past few years:

The California Senate recently passed The Healthy California Act approving a single-payer system for the state but it has since been tabled in the Assembly. Measures in Colorado and Vermont were killed due to concerns over the cost of the single-payer system being estimated as greater than the entire state government budget. If California does enact their single-payer law, they would still need a waiver from the Trump administration to redirect federal funding to the single-payer state program.

The New York Health Plan was expected to pass the Assembly with wide margins this year and has crossed over. Past bills succeeded in the house but were not picked up in the state Senate. When speaking about this bill, NY Senator Jeffrey Klein, the head of an independent caucus, said: “A single-payer system would create the peace of mind that residents could have access to quality medical care including outpatient and inpatient medical care, primary and preventive care, prescription drugs and laboratory tests.”

On a national level, there have been a few bills proposed over time for single-payer or universal health care. US HR676, Expanded & Improved Medicare For All Act, would establish the Medicare for All Program to provide all individuals residing in the United States and U.S. territories with free health care that includes all medically necessary care, such as primary care and prevention, dietary and nutritional therapies, prescription drugs, emergency care, long-term care, mental health services, dental services, and vision care.

Other Health Care Bills

By this time we are all aware of the House’s new health care bill, the American Health Care Act (AHCA) of 2017, and the Senate’s corresponding bill, the Better Care Reconciliation Act (BCRA) of 2017, but what are they actually aiming to do? These bills essentially aim to roll back the Affordable Care Act (also known as Obamacare), a promise many Republicans campaigned on. The BCRA, officially labeled a “discussion draft” as of now, would essentially slash taxes on wealthy people and businesses, reduce federal funding for Medicaid, phase out Medicaid’s expansion under the Affordable Care Act and limit the tax credits available to help people purchase insurance on the individual market. The bill also removes the mandatory participation penalty but instead proposes subjecting people who did not maintain coverage the year before to having their premiums raised by as much as 30%.

What Are Some of the Arguments Against a Single-Payer System?

Many people think the role of the government in citizens lives’ should be limited, and believe the responsibility to pay for health care coverage in individual rather than governmental. Obviously, a single-payer system would expand the government’s role in our lives and thus is not compatible with the limited government point of view.

Another argument against any type of universal, single payer system comes from the insurance companies. A socialist or single-payer system would simply put them out of business. According to the Center for Public Integrity “Businesses and organizations that lobbied on health reform spent more than $1.2 billion on their overall lobby efforts,” so there is no doubt this is a high stakes fight.

The disappearance of competition in health care might also lead to a lack of competition among payers, which would reduce physicians’ control over standards of care and reimbursement. Lack of competition also allows the door to be opened to compromised quality for visits and procedures because there is not the stress to perform well if companies are not competing for business. Then, because there is limited care and funding, waiting lists, very prominent in Canada, could become a familiar health care feature of single-payer systems, especially for higher-cost or cutting-edge healthcare procedures or needs. Dr Geddes, a regent of the University of Colorado, stated that advances in pharmaceuticals, medical equipment, and many surgical techniques come from the United States, where a free market encourages entrepreneurs.

What Are Some of the Arguments For a Single-Payer System?

Many people think health care is a basic human right, and that a rich country such as ours should be making sure all citizens enjoy quality health care. Many people believe that single-payer could have a place in the United States if it is implemented correctly. Other people simply argue it is simply immoral to leave our most vulnerable citizens without real care.

There are potential positive effects on our economy. Besides the potential savings mentioned about, not worrying about health insurance will free people to change jobs, start businesses, and otherwise take economic risks that are just too big when your health care is at stake.The Congressional Budget Office estimates 49 million would be uninsured by 2026 under the Senate health care bill (BCRA). Not providing insurance for people, on the other hand, especially leaving behind many poorer Americans, will serve to exacerbate other difficult health challenges, like the opioid epidemic. This will, in turn, create issues in our economy – including some economic issues covered in AEI‘s Dr. Nick Eberstadt’s talk “Men Without Work: America’s Invisible Crisis”.

What are your thoughts on the current state of health care? Thoughts on future steps? What would work and what wouldn’t? Concerns you have?